Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (13,000 units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss. $ 390,000 195,000 195,000 217,500 $ (22,500)
Due to erratic sales of its sole product-a high-capacity battery for laptop computers-PEM, Incorporated, has been experiencing financial difficulty for some time. The company's contribution format income statement for the most recent month is given below: Sales (13,000 units x $30 per unit) Variable expenses Contribution margin Fixed expenses Net operating loss. $ 390,000 195,000 195,000 217,500 $ (22,500)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Sales
Req 3
GA
Refer to the original data. By automating, the company could reduce variable expenses by $3 per unit. However, fixed expenses
would increase by $53,000 each month. Assume that the company expects to sell 20,800 units next month. Prepare two
contribution format income statements, one assuming that operations are not automated and one assuming that they are. (Show
data on a per unit and percentage basis, as well as in total, for each alternative.) (Do not round your intermediate calculations.
Round your percentage answers to the nearest whole number.)
Total
Req 4
PEM, Incorporated
Contribution Income Statement
Not Automated
Per Unit
O
0
$
Req 5A
< Req 5A
0
%
Req 5B
0
Total
Req 5C
Automated
Per Unit
0 $
Req 5C
0
>
0
%
0
Show less A

Transcribed Image Text:Due to erratic sales of its sole product-a high-capacity battery for laptop computers—PEM, Incorporated, has been experiencing
financial difficulty for some time. The company's contribution format income statement for the most recent month is given below:
Sales (13,000 units x $30 per unit)
Variable expenses
Contribution margin
Fixed expenses
Net operating loss
$ 390,000
195,000
195,000
217,500
$ (22,500)
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